The Retirement Benefits Authority (RBA) has dropped its earlier proposal to bar workers under 50 from accessing their pension savings following opposition from young employees. The U-turn is a major shift in Kenya’s pension policy as the country grapples with growing old-age poverty and low pension coverage.
New Proposal to be in July Finance Bill
At the Association of Retirement Benefits Schemes (ARBS) meeting held at Radisson Blu Hotel, Nairobi on March 14, 2025, RBA CEO Charles Machira said the regulator will instead support partial access to pension funds before 50. The proposal to be included in the July Finance Bill will allow workers to access up to 40% of their retirement savings before reaching the age threshold.
Currently, Kenyan law allows individuals under 50 to withdraw up to 50% of their pension benefits when changing jobs, a provision that has been a subject of debate among policymakers, employers and savers.
Growing Elderly Poverty
While the regulator’s new stance is a response to youth concerns, it also raises broader questions on financial security in retirement. Data from Kenya National Bureau of Statistics (KNBS) shows that over 81% of Kenyans above 60 are still in active employment, a worrying reality: many are unable to retire due to lack of savings.
The situation is worsened by low pension penetration, with over 70% of Kenyans retiring without any meaningful pension income, relying on meager payouts from the National Social Security Fund (NSSF).
Historically, NSSF contributions were capped at Sh400 per month and yielded average retirement payouts of under Sh250,000. But this changed in February 2023 when monthly contributions rose to Sh4,320 and the fund’s reserves grew significantly. As of June 2024, NSSF’s asset base had hit Sh400 billion from Sh295.6 billion in December 2022.
Urbanization and the Changing Role of Family
Kenya’s demographic trends and cultural shifts are putting pressure on the pension system. Urbanization, smaller family units, and declining extended family support are making traditional retirement support models obsolete. Where rural communities once provided a safety net for the elderly, today’s retirees are increasingly isolated, especially in urban areas.In response, the government introduced a Sh2,000 monthly stipend for citizens above 70 to cushion the most vulnerable. But this safety net is far from enough to ensure dignified aging.
Retirement Insecurity: A Growing Fact
A recent RBA survey found that 57% of retirees think their pension savings are inadequate, 41% are confident in their financial preparedness and 2% are unsure of their future.
As of December 2024, total retirement benefits assets under management (AUM) was Sh2.25 trillion thanks to increased statutory contributions. But questions remain on equitable access and long-term sustainability.